Berkshire Hathaway Inc.

Berkshire Hathaway began as a textile manufacturing company in Valley Falls, Rhode Island in 1839, founded by Oliver Chace. It merged with Hathaway Manufacturing in 1955, creating Berkshire Hathaway. By the early 1960s, the merged company was struggling — cheap foreign competition was destroying American textile manufacturing. This is where Warren Buffett enters the story.

Warren Buffett began buying Berkshire Hathaway shares in 1962 as a value investment, believing the stock was cheap relative to its working capital. In 1964, Berkshire's CEO Seabury Stanton offered to buy back Buffett's shares at $11.50. When the formal offer arrived, the price was $11.375 — 12.5 cents lower. Furious at what he saw as bad faith, Buffett bought enough shares to take control of the company and fire Stanton. He later called it the worst financial decision of his life: instead of deploying that capital elsewhere, he was stuck with a dying textile business.

Buffett began using Berkshire's cash flows to acquire insurance companies, starting with National Indemnity in 1967 for $8.6 million. The key insight was "float" — insurance companies collect premiums before paying claims, giving them a pool of investable cash that costs nothing if claims are managed well. Berkshire's insurance float grew from millions to hundreds of billions of dollars, providing Buffett with an enormous, essentially free source of investment capital.

Buffett's annual shareholder letters became some of the most read documents in finance — combining plain-English investment wisdom with self-deprecating humour and occasional devastating criticism of Wall Street. The Berkshire annual meeting in Omaha grew into a pilgrimage attracting 40,000 shareholders each year, nicknamed "Woodstock for capitalists." Buffett became the most trusted investor in America by being, almost uniquely among his peers, consistently honest about his mistakes.

By 2023, Berkshire Hathaway held over $150 billion in cash — more than the GDP of most countries — as Buffett struggled to find acquisitions large enough to move the needle. Buffett, then 93, had designated Greg Abel as his successor. Charlie Munger, Buffett's partner of 60 years and the intellectual architect of Berkshire's investment philosophy, died in November 2023 at age 99. Buffett called it the end of an era.